COLUMBUS, Ohio – Rules regulating oil and gas well construction, water handling, and chemical disclosure in the fracking process are on their way to the governor’s desk for John Kasich’s signature.

The Ohio House passed the energy bill early Thursday evening in a vote of 73 to 19.

Representative Sean O’Brien from Brookfield says, “I support this bill because it’s a start in the right way.”

O’Brien’s Democratic colleagues, Ron Gerberry and Tom Letson, voted in favor of the legislation. Bob Hagan voted against. His attempt to add an amendment that would guarantee Ohioans would get 60% of the jobs was tabled.

“Drive down to Carroll County. Drive down to any of the roadways where they’re into that drilling. Drive into the hotels and motels and look at the license plates. I did. Oklahoma, Texas, not to many Ohioans,” Hagan said.

In a concurrence vote, the state Senate approved the House’s amendments to the bill in a vote of 21 to 8.

Senators Capri Cafaro and Joe Schiavoni voted against the legislation. Schiavoni also had an amendment that was tabled.

“There was nothing in the bill about the public’s ability to give feedback in the permit process. So I tried to amend the bill to have a 30 day comment period just so that the public knows where these wells are going to go and when they’re going to go in,” Schiavoni said.

Schiavoni also said the bill was stripped of its original language pertaining to injection wells. That a portion of their revenue would go toward geological research on seismic activity.

While the bill makes strides toward companies having to disclose what chemicals are in fracking fluid, environmentalists say it limits who can sue energy companies for chemical trade secrets.

There is renewed interest by energy companies to lease property in Athens, Vinton, Meigs, and Washington counties. Claims are being made via newspaper and radio outlets that landowners could receive up to $5,700 per acre if they sign an oil and gas lease.

Landowners are encouraged to Look Before they Lease with any energy company. Landowners can call Susi at (740) 767-4938 for more information about a landowner toolkit that will help them understand important information that should be included in a lease. It is important to fully understand all information contained in any lease provided by an oil and gas producer, attorney, or 3rd party before signing.

Look Before You Lease has worked with an oil and gas law firm in Ohio to create a sample landowner friendly lease that can be used as a starting point to help understand terms and provisions included in oil and gas leases that should be included to help protect their families interests.

Landowners should not sign any lease without first working with a qualified oil and gas attorney and should understand all financial implications of entering into an oil and gas lease.
Visit http://www.lookbeforeyoulease.org for more information or call (740) 767-4938

End Public Service Announcement
_______________________________________________________Additional Note: Any landowners considering a lease with Cunningham Energy, LLC. should know that they will not automatically receive $5,700/ acre and may not receive more than $125 per acre as you can see from the excerpt below.

Landowners should also note that royalties from vertical and/or shallow wells may not produce quantities of oil, gas, or other hydrocarbons in the quantities that that horizontal wells are currently producing in the Utica Point Pleasant Shale Play. Therefore royalties paid to landowners with shallow or vertical test wells may be different from a landowners expectation.Excerpt from Athens News ArticleRather than paying the $2,500 per acre signing bonus it had earlier been willing to pay, according to a letter Lavelle sent to his clients Friday, the company is now willing to pay the far more modest amount of $125 per acre to keep the already-signed landowners under contract while the company investigates the geology of the county.The property owners, according to Lavelle, will get the initial reduced payment even if Cunningham doesn’t put together a joint venture to drill. If the project does come to fruition, the leases will pay off $5,700 per acre over the life of the lease – though this will be more of a “back-end” than an up-front payment, and a landowner won’t get this full amount if his or her land goes into oil and gas production and royalty provisions start kicking in. As the amendment states, “The likelihood of that many vertical wells being drilled and finding oil and gas in commercial quantities to hold the leases by production within the time frames in question is very unlikely and highly doubtful so if the results are good, you will likely get most of the bonus rental payment until your property is drilled.”The higher payment is contingent on the Utica actually producing here, and Cunningham and/or its venture partner drilling production wells. (This prospect also depends on the company’s finding a new investment partner, which according to Lavelle it’s in the process of locating.)By Jim Phillips. May 06, 2012

PERRY COUNTY LANDOWNERS’ Association

LEARN HOW TO CLEAN UP YOUR OLD OIL AND GAS LEASES

May 16th, 2012 – 6:00 pm

Somerset Elementary School

The next in the spring series of information/education meeting regarding Shale Oil and Gas Leasing in Perry County will be held at the Somerset Elementary building Wednesday May 16th , 6:00pm-8:00pm. This meeting is open to the public. This meeting is sponsored and organized by the Perry County Landowners Association (PCLA).

Jackie Hoover, Perry County Recorder will be on hand to give everyone an update on the leasing activity to date in Perry County. And answer questions from the group. Lucinda Yinger with TCCI Laboratories Inc. in New Lexington will also present discussion on the methods and importance of water testing before, and after any drilling activity in the your area

Mr. J. Richard (Dick) Emens, legal counsel for the PCLA, will conclude the meeting with a point by point presentation on how landowners can clean up old non active oil and gas leases on their property that may still be recorded on the deed.

This meeting is free and open to the public. Don’t miss this opportunity to gain beneficial information that can help in your understanding of this new and growing oil and gas exploration in Perry County..

WASHINGTON COUNTY, Pa. – Brian and Amy Smith seem to be the first example in western Pennsylvania of a homeowner being denied a mortgage because of gas drilling on a next-door neighbor’s property.

The drilling goes on day and night at a new Marcellus Shale well in Daisytown, Washington County, and Brian Smith told Channel 4 Action News investigator Jim Parsons that he has no complaints — except one.

“As far as drilling and the noise and the lights in the window? No,” he said. “But when it affected the value of my home? Absolutely.”

The Smiths live across the street from the new gas well. They applied for a new mortgage on their $230,000 home and hobby farm, and Quicken Loans congratulated them on their conditional approval.

“They said all the paperwork will be done by the end of the week and we’ll be able to close,” Brian Smith said. “Somewhere in there, they called us and said, ‘Your loan got denied.’ ”

In an email, Quicken Loans told the Smiths, “Unfortunately, we are unable to move forward with this loan. It is located across the street from a gas drilling site.” Two other national lenders also turned down Brian Smith’s application.

Quicken Loans emailed the following statement to Channel 4 Action News: “While Quicken Loans makes every effort to help its clients reach their homeownership goals, like every lender, we are ultimately bound by very specific underwriting guidelines. In some cases conditions exist, such as gas wells and other structures in nearby lots, that can significantly degrade a property’s value. In these cases, we are unable to extend financing due to the unknown future marketability of the property.”

Clean Water Action said that in other parts of the country, when shale gas drilling has arrived, mortgages at nearby properties sometimes get denied. This is the first case they’ve heard in Pennsylvania.

“The banks aren’t stupid,” said Myron Arnowitt, director of Clean Water Action in Pennsylvania. “They’re going to look at that and be more cautious in terms of what they are willing to mortgage.”

“If I can’t refinance, could somebody get a loan to purchase my house? And that would be my concern. That’s definitely a worry,” Brian Smith said.

Homeowners who are denied by national lenders because of gas drilling could try local banks. First Federal in Washington, Pa., said it does not deny mortgage applications based solely on nearby drilling.

Photo Credits: Map courtesy ODNR.Photo Caption: Attorney John Lavelle, in his letter Friday to landowners who signed his oil and gas leases blamed the lack of big investors in Cunningham Energy’s drilling plans on a new map that shows Athens County well outside the expected “core play area” for developing deep-shale resources in Ohio

Another chapter has opened in the drama that began last fall when a West Virginia oil and gas company came into Athens and started throwing theoretical money around.

A local attorney who has negotiated a lease for deep-shale drilling for hundreds of Athens County landowners with Cunningham Energy of Charleston has informed his remaining clients that the company is now proposing a significantly less lucrative lease.

The new, scaled-down lease deal, according to attorney John Lavelle of Athens, will enable Cunningham (and/or an as-yet-unnamed venture partner) to drill five test wells in different parts of Athens County. Without test wells showing promise, no oil and gas development will occur in Athens County.

The company apparently doesn’t have the financial wherewithal to drill the test wells as well as honor the $2,500 per acre signing bonuses with numerous Athens County property owners. Moreover, it can’t find a joint partner to fund those leases at the $2,500 amount.

The new lease terms, Lavelle wrote in a letter to landowners who had extended their leases with him in March, are based partly on a state geology report indicating that Athens County lies to the south of the prime Utica shale play.

Under the newly proposed lease terms, Lavelle wrote, Cunningham Energy, LLC, is ready to commit to drilling five vertical test wells into the Utica shale formation in Athens County by the end of January 2014. If the wells don’t show that the deep-underground Utica shale layer will be productive here, Cunningham (or whatever company it’s working with) won’t proceed with production wells.

In the meantime, Cunningham Energy is willing to pay landowners a nominal sum to keep their leasing options alive, with a much bigger payout years in the future if the company’s wells become productive.

Rather than paying the $2,500 per acre signing bonus it had earlier been willing to pay, according to a letter Lavelle sent to his clients Friday, the company is now willing to pay the far more modest amount of $125 per acre to keep the already-signed landowners under contract while the company investigates the geology of the county.

The property owners, according to Lavelle, will get the initial reduced payment even if Cunningham doesn’t put together a joint venture to drill. If the project does come to fruition, the leases will pay off $5,700 per acre over the life of the lease – though this will be more of a “back-end” than an up-front payment, and a landowner won’t get this full amount if his or her land goes into oil and gas production and royalty provisions start kicking in. As the amendment states, “The likelihood of that many vertical wells being drilled and finding oil and gas in commercial quantities to hold the leases by production within the time frames in question is very unlikely and highly doubtful so if the results are good, you will likely get most of the bonus rental payment until your property is drilled.”

The higher payment is contingent on the Utica actually producing here, and Cunningham and/or its venture partner drilling production wells. (This prospect also depends on the company’s finding a new investment partner, which according to Lavelle it’s in the process of locating.)

Lavelle said the decision by Cunningham Energy appears to be based in part on information released by state geologists, indicating that Athens County is outside of the richest part of the Utica shale formation for oil and/or natural gas. (He also suggested, however, that the presence of “an outspoken minority group opposed to all hydrocarbon development” may be making Athens County less attractive to investors than other Ohio counties.)

After the Ohio Department of Natural Resources’ state geologist released a map indicating that Athens County may be 20-30 miles south of the high-potential part of the shale play, Lavelle said, a number of Fortune 500-sized industry players dropped their interest in investing in drilling here.

“The big companies are using that map as a bludgeon,” he said. “Basically, they just left the table.”

OTHER SOURCES, HOWEVER, HAVE POINTED out that the big companies have their own geology reports, much more sophisticated and complete than anything Ohio’s state geologist has to go by. As a result, the big companies weren’t likely to have been discouraged by the state’s geology report, since they already have their own better information.

In fact, in an interview with The Athens NEWS in late March, state Geologist Larry Wickstrom readily conceded that the newest report is just a semi-informed prediction about where deep-shale drilling will bear fruit in Ohio. The report depends on scanty test-bore evidence, especially in our area, he said, also agreeing that the big oil companies have much better and more valuable information.

Wickstrom made special pains to point out that being placed outside the best-case Utica map doesn’t necessarily mean successful oil and gas development can’t happen in Athens County.

In the interview, Wickstrom emphasized that his agency “fully expects people to go outside that core area and explore, and we hope they do.”

He said he agreed with an oil and gas expert at Marietta College, who March 21 advised not to “abandon the ship” just yet on the oil and gas potential in the Athens area. “My feeling all along is that the most southeastern part of Ohio is on the marginal end, at best, of the Utica-Point Pleasant shale play,” Robert Chase, chair and professor in Marietta College’s Department of Petroleum Engineering and Geology, told The NEWS. “However, until someone gets bold enough to drill something in the area, I don’t think we can conclude there’s nothing here.”

As the drilling inches farther south in search of oil and liquid natural gas, production in nearby areas will have more bearing on what happens here. So far the closest oil and gas deep-shale wells are in Noble and Muskingum counties, but plans are afoot for wells in Morgan and Washington counties, two counties adjoining Athens to the north and east.

Another source familiar with the oil and gas industry and market noted that Cunningham’s difficulty in finding a venture partner may be because the big players in the oil and gas industry are busy developing deep-shale prospects elsewhere. With fully committed materials and crews, they can’t commit too early to an uncertain play, since most leases have a five-year production window.

This point is actually made in Lavelle’s letter to lease-holding landowners on Friday. In explaining why Cunningham has had difficulty finding a Fortune 500 venture partner, Lavelle writes, “The onset of thousands upon thousands of other Utica shale acres available on the market in proven geological counties in eastern Ohio has further exasperated (sic) marketing efforts of our leaseholds. The risk involved with a dearth of information pales against the known quantities elsewhere.”

CUNNINGHAM HAD SIGNED LEASE options with many local landowners agreeing to pay a $2,500-per-acre signing bonus, plus 16 percent royalties on any oil or gas drilled from their land. The company reportedly has options on around 100,000 acres in the county, about 36,000 of them using the Lavelle lease terms. They originally had signed property owners representing 42,000 acres, though some apparently didn’t renew after being offered an extension in mid-March.

Lavelle said Friday that with the current uncertainty about whether drilling in Athens County will be profitable, he felt the best move for his landowner clients was to work out a deal to keep their drilling leases with Cunningham viable, and get the company to commit to gathering some hard scientific data.

Lavelle, who will still receive $25 per acre for providing “landowner-friendly” leases to his clients (with the potential for an additional $25 an acre later, if the play proves out), said Cunningham is now aiming to put together about 40,000 acres in Athens County to drill. That $25 fee means the initial payment to property owners will be $100 an acre.

The attorney said that in addition to letting landowners keep their involvement alive in the potential payoff of local oil-and-gas development, the new lease terms will help provide the hard test data on the shale play here that up till now has been difficult to come by.

“We felt this was the only way we could ever get those five vertical test wells drilled,” he explained.

In his letter, Lavelle stressed that while the new development may seem like taking one step back to later take two steps forward, he remains confident that Cunningham does want to drill here, though the drilling may be the more traditional vertical type rather than horizontal.

“It is my belief that Cunningham Energy remains committed to proving the viability of the Utica play in our area,” he assured his clients.

ONE PROPERTY OWNER WHO originally signed Lavelle’s Cunningham lease, and then signed the extension in March, told The NEWS Sunday that he doesn’t intend to sign the new offer. “I am not going to sign the extension,” said the property owner, who asked that his name not be used because of the sensitivity of the issue. “I think it would be silly to put a well on my property for $150 an acre more or less, and if nothing comes up, then I got a mess to deal with. If they drill somewhere and they hit good, then I can sit back and wait for the offers.”

COLUMBUS, Ohio (AP) — An Ohio natural resource agency’s proposed guidelines for drilling in state parks would require natural gas and oil companies to stay at least 300 feet — the length of a football field — from campgrounds, certain waterways and sites deemed historically or archaeologically valuable.

Documents on proposed guidelines were released by the state Department of Natural Resources this week after the Ohio chapter of the Sierra Club filed a lawsuit claiming the agency ignored repeated requests by the group to review them.

The 89-page report lists the “best management practices” on site restoration and other topics, and guidelines for emergency and pollution incidents. Other proposals include state approval before companies could store drilling waste in pits and an agreement on the locations of all drilling equipment.

The agency also released proposals for drilling leases. They show possible arrangements for companies interested in drilling directly below or drilling horizontally from land adjacent to property with oil and gas deposits.

Agency spokesman Carlo LoParo, who said the 300-foot buffer proposal would be applied above ground, said there are no specific policy decisions yet on what state land will be put up for competitive bids for drilling. But he emphasized that hundreds of other state properties besides state parks would be considered. He said a five-member commission that will be appointed later this summer will select the properties and lease the mineral rights, though the state can move forward with plans before the commission is appointed.

Natural gas drillers in Ohio are active in the eastern part of the state, going after deposits in the underground Utica Shale. The state passed a law in September that opened its parks and other state-owned lands for drilling, and officials have been developing leasing terms for drilling companies.

Jed Thorp, the Sierra Club’s Ohio chapter manager, said the proposals are inadequate. He said he’s hopeful state lawmakers will eventually reverse the law.

“When people go to a state park, they don’t want to see fracking, or hear fracking, or smell fracking,” he said in a statement. “They want to relax.”

Thorp also said the Sierra Club, which filed its lawsuit Monday, won’t drop its suit. He said the agency failed to follow the state’s public records law by ignoring requests for the documents as far back as October.

LoParo called the group’s reaction premature because the documents are draft proposals that don’t apply to a particular circumstance. He said the documents were only completed this week.

“Public records are something that we take very seriously,” he said. “You can’t provide something that you don’t have. And these documents were provided as soon as they were available.”

Opponents say they’re concerned about the environmental impact of the drilling, which includes hydraulic fracturing, or “fracking.” The process involves drillers blasting millions of gallons of water, sand and chemicals deep underground to break up rock deposits.

Supporters of the law say there’s a potentially vast reservoir of oil and gas in the Utica Shale, which lies below the Marcellus Shale, where oil companies in Pennsylvania have drilled thousands of wells in search of natural gas and oil.

But natural gas drilling has become a contentious issue in Pennsylvania, where public health advocates have criticized a new law that will limit accessible medical information on illnesses that may be related to gas drilling. It takes effect April 14.

According to the National Conference of State Legislatures, more than 130 bills have been recently introduced in 24 states to address fracking. It includes a range of topics like waste treatment, disposal regulations and requirements to publicly disclose the composition of fracturing fluid chemicals. At least nine states have proposed fracking suspensions or studies on their impact.

The Ohio Department of Natural Resources (ODNR) recently released an updated map showing their best guess as to where the best prospects are for Utica Shale drilling in the state (a copy of the map is embedded below). And boy oh boy, is that map creating a buzz! Some residents are excited that their property may now become highly desirable to be leased for drilling, and other residents are discouraged that their properties, once thought desirable, may be less so now.

Larry Wickstrom, one of four men involved in developing the map, says he is a little flabbergasted by all the attention it is getting.

The map is “just the addition of new information … and fine-tuning what we have,” he said. It is merely the state’s best guess as to what might be found thousands of feet underground.

Areas outside the main development area could still be productive, he advised, and the map probably will change as state geologists get even more information.

The map, relying on new data, shows a slightly different footprint in eastern Ohio for Utica shale, identifying a core area for drilling that covers 10.8 million acres from Ashtabula County south into Guernsey County.

Much of the drilling in Ohio has been located in Carroll, Harrison, Columbiana and Jefferson counties. Those four counties generally rate good to very good, according to the new data.

Summit, Medina, Wayne and Portage counties are all in the good area. Most of Cuyahoga, Lake and Lorain counties are now excluded.*

So far energy companies have drilled 60 Utica gas wells in Ohio, with permits to drill an additional 194 approved by the state. Estimates are that over 2,000 wells will be drilled in the Utica in Ohio by 2015, so we’re just at the beginning of major drilling activity. It means there’s a lot on the line for landowners who want to lease their land—and maps like this one will play a part in whether or not they lease, and if they do, how much money they will receive. So contrary to the flabbergasted ODNR rep, it’s no surprise to MDN that there’s a big buzz over this latest map.

Sample Lease Agreement For Ohio

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From NY Times Drilling Down Series: Rush to Drill for Natural Gas Creates Conflicts With Mortgages. Submit your Photo to Susi@ruralaciton.org